Additionally, it is even unsafe for Americans who do read Arabic, because if the site has user generated content, and one of the users submits content which is against the Islamic rules, they may use it as an excuse to seize the valuable domain.

I don't think this is about 'seizing the valuable domain', or the first one they'd've done was bit.ly.

I strongly doubt that this sort of action by NIC.ly is about money, it's about them - probably after having received political pressure - wanting to enforce their local moral/ethical standards on their ccTLD domains, particularly those held by people from outside Libya.

If they go after the highest profile sites, they call attention to themselves and risk a backlash. Reclaiming from the bottom up establishes a precedent, and allows NIC.ly to own domains before they become too popular to grab.

The moral/ethical stance is a complete pretext. If Libya was really worried about morality, they'd do something about their atrocious human rights record.

That's a very western view. As far as they're concerned, both shutting down the "adult" shortener and their human rights record are both examples of their high moral purity. Their idea of moral behaviour and yours differ, is all.

Except, of course, your idea of morality and their idea of morality is very different.

The assumption that your morality is the only one that matters pretty much reinforces the point I was trying to make with my original comment.

In any event, NIC.ly can take back any domains it wants to. You're playing under NIC.ly's rules, and if they change their rules that's their business.

Who do you think they fear a backlash from? If they change their rules to prohibit all non-Libyan registrants, they can reclaim any domains they like. I sincerely doubt that the Libyan government and NIC.ly really care what people moan about on Twitter and tech blogs.

What do you think they're planning to do with these 'valuable' domains? Nothing, because they actually have absolutely no value to anyone who hasn't already established their branding around it.

All these guys want to do is reclaim their country's TLD for their country and to exclude things that offend their local values.

And they're entirely entitled to do that.

In terms of the domain business, of course it's their ball and they can take it home if they choose, and you're probably right that it will end up being a non-issue. But I think it's possible to distinguish between 1) the practices of a perfectly valid moral system based on Islamic law, and 2) the actions of a totalitarian regime intent on building and keeping power for itself at the expense of other nations and its own people.

And what kind of backlash would that be ?

I imagine they're more pissed of from the US repeatedly dropping bombs on them than .... what 4chan DDoSing NIC.ly ?